National Bankshares (NKSH) risk factors, FY2025 10-K

Other

1. 01Focus on lending to small to mid-sized community-based businesses may increase our credit risk
2. 02The allowance for credit losses may not be adequate to cover actual losses
3. 03A decline in the condition of the local real estate market could negatively affect our business
4. 04The Bank has a moderate concentration of credit exposure in commercial real estate, and loans with this type of collateral are viewed as having more risk of default
5. 05Nonperforming assets take significant time to resolve and adversely affect the Company’s results of operations and financial condition
6. 06The Company relies upon independent appraisals to determine the value of the real estate which secures a significant portion of its loans, and the values indicated by such appraisals may not be realizable if the Company is forced to foreclose upon such loans

MARKET RISK

1. 07If competition increases, our business could suffer, which could result in loan losses and adversely affect the Company’s financial condition and results of operations
2. 08Consumers may increasingly decide not to use the Bank to process their financial transactions, which would have a material adverse impact on the Company’s financial condition and operations
3. 09The Company's business is subject to interest rate risk and variations in interest rates and inadequate management of interest rate risk may negatively affect financial performance
4. 10Liquidity could be impaired by an inability to access the capital markets or an unforeseen outflow of cash
5. 11Unrealized losses in the Company’s securities portfolio could affect liquidity

CYBERSECURITY RISK

1. 12Our information systems may experience an interruption or security breach
2. 13Cybersecurity attacks may disarm and/or bypass system safeguards that are used by us and our vendors and service providers, and allow unauthorized access and misappropriation of financial data and assets
3. 14Insurance may not cover losses from cybersecurity attacks

OPERATIONAL RISK

1. 15The Company is subject to a variety of operational risks, including reputational, legal, and compliance risk, and the risk of fraud or theft by employees, directors, or outsiders
2. 16The Company is dependent on key personnel and the loss of one or more of those key personnel may materially and adversely affect the Company’s operations and prospects
3. 17The Company relies on other companies to provide key components of the Company’s business infrastructure
4. 18The Company’s ability to operate profitably may be dependent on its ability to integrate or introduce various technologies into its operations
5. 19The Company operates in a highly regulated industry, and the laws and regulations that govern the Company’s operations, including changes in them or the Company’s failure to comply with them, and regulatory actions implementing such laws and regulations, may adversely affect the Company
6. 20Regulatory capital standards may have an adverse effect on the Company’s profitability, lending, and ability to pay dividends
7. 21Changes in accounting standards could impact reported earnings51% rewritten
8. 22Failure to maintain effective systems of internal and disclosure controls could have a material adverse effect on the Company's results of operation and financial condition
9. 23The Company’s ability to pay dividends depends upon the results of operations of its subsidiaries
10. 24Climate change may result in operational changes and expenditures that could negatively impact the Company’s business68% rewritten

LEGAL RISK

1. 25The Company is subject to claims and litigation pertaining to fiduciary responsibility

GENERAL RISK

1. 26Changes in funding for local universities could materially affect our business
2. 27If the economy suffers a recession, our credit risk will increase and there could be greater loan losses
3. 28While the Company’s common stock is currently traded on the Nasdaq Capital Market, it has less liquidity than stocks for larger companies quoted on a national securities exchange
4. 29Natural disasters, acts of war or terrorism, geopolitical instability, the impact of public health issues and other adverse external events could detrimentally affect our financial condition and results of operations
5. 30The development and use of Artificial Intelligence (“AI”) presents risks and challenges that may adversely impact our business